Mortgage Blog

What is a Fixed rate mortgage?

When people are ready to begin searching for a home, they are presented with a variety of loan options that may be overwhelming. An individual can apply for a fixed rate mortgage, a graduated payment mortgage, a variable rate mortgage, or more. Luckily, a fixed rate mortgage is one of the most common choices and is also one of the easiest to understand.

In a fixed rate mortgage the loan is not tied to an index. This means that the interest rate will not change over the lifetime of the loan. The interest rate is typically set by the lender based on the individual’s credit score, employment, and down payment. The interest rate will typically be given as a percentage in an increment of ¼ or 1/8. Each month the person with the mortgage will pay a set amount that will include a portion towards the principle, or the original amount the loan was for, and the interest.


Typically fixed rate mortgages are given for a period of fifteen or thirty years. Occasionally they are given for shorter terms ( 10/20yr) when borrowers express non traditional loan programs terms.

Fixed rate mortgages are insured by the federal government, who has taken steps to help to standardize this type of loan. Although the interest rate on a fixed rate mortgage begins higher than an adjustable rate mortgage, there is inherently less risk because the index will never rise. Those accepting the adjustable rate mortgages will have the benefit of lower interest, but always the rise that it could jump from one month to the next. In the United States, the fixed rate mortgage is the most common type of housing loan.


One notable downside to fixed rate mortgages is that you can never change your mortgage payment or interest rate over the life of the loan without refinancing. One disadvantage of refinances is in order to a secure lower interest rate that you must qualify with income, assets, credit and appraisal in order to secure the lower interest rate. For most people, however, the reliability of the monthly payment and interest rate, the fixed rate mortgage proves to be a good choice.

The fixed rate mortgage is a very popular option in the United States. It offers reliability and less fluctuation than other loan options. With the lessons learned from the housing bubble, the reduced risk is a good path to take for the security it offers.


This blog is for informational purposes only. Please consult your Attorney for applicable Florida laws. NMLS #1743702


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